Breakingviews

Gauging luxury demand now more art than science

September 14, 2016

Watch-maker Richemont said first-half operating profit will be down 45 percent, with sales poor in all regions. Bag-maker Hermes is to scrap sales targets. With global GDP still to grow by 2.4 percent this year, brands can't just blame weak economies.

Minority investors should check the returns policy

September 7, 2016

Sports Direct's shareholders are being trampled by a strong entrepreneur with a 55 pct stake. Italian luxury brand Prada has a similar issue: entrenched founders whose strategy isn’t working. Big shareholders can benefit companies, but other investors end up stuck if things sour.

Luxury groups should focus their FOMO on Iran

April 25, 2016

With $32.6 bln of frozen offshore cash to be repatriated post-sanctions and GDP to grow 6 pct next year, Tehran can be a magnet for high-end consumption. A lack of infrastructure and political volatility are reasons to hesitate. Offsetting that is the risk of missing out.

YSL adds to unhappy trend of big designer exits

April 1, 2016

Hedi Slimane is leaving the luxury house after four years. It’s a setback for one of French group Kering’s fastest-growing labels. Losing the odd creative is no crisis, but with recent exits at Dior, Gucci and Lanvin, retaining talent could drag on profitability. 

Burberry bid would be an extravagance

March 8, 2016

The trench-coat maker is the subject of takeover speculation but a deal, which could cost 8 bln pounds, doesn’t stack up. Its stock isn’t particularly cheap and costs are already lean. With the luxury sector deteriorating, it’s not clear a new owner could halt slowing sales.

Gucci gives sneak preview of life after turnaround

February 19, 2016

Kering’s most important luxury brand beat sales estimates in the fourth quarter, the result of more desirable products and a slick advertising campaign. It looks to be putting three years of bumpy growth behind it. Yet falling operating profit margins will continue to drag on the valuation.

Luxury groups could shrink their way to riches

December 30, 2015

Labels like Prada and LVMH have spent a decade expanding like crazy to meet emerging market demand. Burberry has tripled its store base. It’s time to go the other way. While cutting back will be painful, it could spur higher luxury valuations. Hermes is one that has it right.

Savoy and Plaza sale means trophies for all

December 9, 2015

Accor is buying the owner of the luxury London and New York hotels for $2.9 bln from its Saudi and Qatari investors. Adding higher-end lodging may help the French group make its online booking system more competitive. The price, however, looks too high to create much value.

Burberry poorly dressed for luxury’s chill winds

October 15, 2015

The British fashion label’s sales disappointed in the first half. It is highly exposed to Hong Kong and China, and scantily represented in Japan where Chinese tourists now shop. The U.S. is stormy too. Cost cuts help, but Burberry may just have its stores in the wrong places.

Yoox glee at Net-a-Porter exit may wear thin

September 3, 2015

Shares in the upmarket online retailer popped 5 pct as Net’s founder cashed out of the merger agreed in March. Terms of the severance deal with Natalie Massenet confirm that Yoox bought its rival at a bargain price. But it is losing know-how at an important time.